Help with compound interest calculations?
Stacey bought a $1000 RRSP today. After one year she will add $2500. By the end of the second year, the money will have grown to $3851 as it has earned interest over time. What was the interest rate?
a) Apply the compound interest formula to both $1000 and $2500 investments. Assume that interest is compounded annually at the rate, i, to grow to $3851 to get:
1000(1 + i)^2 + 2500(1 + i) = 3851
b) If this equation is written as 1000x^2 + 2500x - 3851 = 0, what does x represent?
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